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Fiscal cliff and economic uncertainty are top of mind in transport circles

By Jeff Berman, Group News Editor
November 19, 2012

Had enough of reading and hearing about companies scaling back investment, research, and hiring plans, due to the pending Fiscal Cliff and other things like economic uncertainty? Well, hold on for a while, because this stuff is not fading away anytime soon.

Once the election ended, talk of the economy accelerated at a fervent clip, surpassing the level it hit near the end of the election—or at least it felt that way.

In case you are doubting the pace of the drumroll of economic uncertainty, an article in today’s Wall Street Journal outlines what our economy is up against (not exactly breaking news but still):

“U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery. Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next. Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.”

Feelings of anxiety and uncertainty (there’s that word again) were prevalent when learning what may be in store for the economy at last week’s National Industrial Transportation League-Intermodal Association of North America TransComp event in Anaheim, California.

NITL President and CEO Bruce Carlton said that it is his hope that “adults sit at the table” to negotiate and come up with a solution that works for the betterment of the country.
“We need a rational way to go forward and get back to the business of tackling the national debt and getting this economy back on its feet,” said Carlton. “We are capable of doing it.”

I hope Carlton is right, especially from a supply chain perspective.

At a NITL-hosted press conference at last week’s event, Matt Ehlinger, NITL 1st vice chairman and director of corporate transportation for NCH Corporation in Irving Texas, said that nothing good can come out of it for supply chains.

“We are not looking forward to the domino effect which would happen if this kicks in,” he said. “It is going to be disruptive. How do you plan for it? These types of cuts have the potential to negatively impact a lot of things.”

NITL leadership stressed that this directly relates to supply chain and transportation stakeholders getting the services they need in order to continue doing what they do or U.S. commerce is going to be affected and the costs for operating businesses and supply chains will be hindered as will U.S. consumers subsequently.

“I don’t imagine there is enough time between [now] and the end of December to make every single decision about spending priorities,” explained Carlton. “There is time to draft a framework for it, but the President and the Speaker need to ultimately decide what the federal government is going to spend money on. You cannot do it all, so what are the priorities? Will they recalibrate existing programs or dip their toe into big entitlement programs, Social Security and Medicare? It is almost unavoidable. The election is over; Congress needs to get to work on this.”

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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